China Lowers Economic Growth Target

3/4/2012 10:57 PM ET

China has set a lower target for economic growth this year, suggesting that the government may be moving away from its focus on rapid growth. At the same time, the country also pledged to maintain a "prudent" monetary policy.

China will aim for 7.5 percent economic growth this year, Premier Wen Jiabao said on Monday at the annual meeting of the National People's Congress in Beijing. China has kept the growth target at 8 percent for the past eight years.

The economy expanded 9.2 percent in 2011, easing from 10.4 percent in 2010. The slowdown can largely be attributed to slackening export growth owing to weaker demand from the U.S and the European countries as well as tight monetary policy conditions at home.

Last month, the People's Bank of China decided to cut the banks' reserve requirement rate by 50 basis points for the second time in three months to boost lending amid sluggish economic growth.

The inflation target is set at 4 percent for this year, unchanged from last year. In 2011, consumer prices rose 5.4 percent compared to 2010.

Wen also said that China will continue to regulate the country's real estate market to bring down property prices to "reasonable levels."

Citing the government work report, Xinhua said the government estimates the volume of total exports and imports to increase by around 10 percent. The government also aims to reduce the budget deficit to CNY 800 billion or around 1.5 percent of GDP.

According to the government report, China will continue to implement a proactive fiscal policy as well as a prudent monetary policy this year . The broad money supply is projected to increase by 14 percent in 2012.

The government has also pledged to make the floating exchange rate regime more flexible and keep the yuan exchange rate basically stable at an appropriate and balanced level.

In a report last month, the World Bank urged China to complete its transition to a market economy. It said the acceptance of China's yuan as the global reserve currency will depend the pace of financial sector reforms and the opening of its external capital accounts.

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